Seeking Alpha

Green Mountain +38.3% AH in response to Coca-Cola deal

  • After coming off a halt, Green Mountain (GMCR) is blasting off in response to news the company has formed a long-term alliance with Coca-Cola (KO) that will result in the latter acquiring a 10% stake in the former.
  • Green Mountain will be Coke's exclusive partner for "the production and sale of The Coca-Cola Company-branded single-serve, pod-based cold beverages." The companies will also "explore other future opportunities to collaborate on the Keurig platform."
  • Green Mountain's Keurig Cold single-serve beverage system, which will support Coca-Cola pods, is expected to launch in FY15 (ends Sep. '15). The system will make "carbonated drinks, enhanced waters, juice drinks, sports drinks and teas."
  • Coke is buying Green Mountain shares at a price of $74.98. Based on AH levels, the company is already staring at a 49% profit.
  • Though investors are naturally focused on other matters, Green Mountain is guiding for FQ2 EPS of $0.93-$0.98, below a $1.02 consensus. Y/Y sales growth is expected to be in the low-to-mid single digit range; the consensus is for 8.1% growth. GMCR's guidance excludes a 4% dilutive EPS impact from the Coke deal.
  • FY14 EPS is expected to be in a range of $3.75-$3.85 vs. a $3.82 consensus. Sales growth is expected to be in a high-single digit range; the consensus is for 8.4% growth.
  • KO +0.6% AH.
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Comments (19)
  • Mark Krieger
    , contributor
    Comments (4578) | Send Message
     
    they missed expectations and lowered guidance-good thing they got the Coca cola deal or the shares would of been smacked
    5 Feb 2014, 05:31 PM Reply Like
  • Parker Logan
    , contributor
    Comments (247) | Send Message
     
    Does this mean SODA has an exclusive with Pepsi?
    5 Feb 2014, 05:31 PM Reply Like
  • jsteinm1
    , contributor
    Comments (161) | Send Message
     
    I think that the silver lining in this for SODA is that KO recognizes that the home beverage is a threat and/or growing market and this validates everything that SODA is doing. I'm hoping that PEP won't want to be left out of it, and may jump on SODA.
    5 Feb 2014, 05:37 PM Reply Like
  • Deja Vu
    , contributor
    Comments (1550) | Send Message
     
    Excellent lesson for why retail should NEVER short shares...or sell options....
    5 Feb 2014, 05:36 PM Reply Like
  • Ron Reed
    , contributor
    Comments (319) | Send Message
     
    Huh? I disagree 100%! This is exactly why options work well. This is exactly why shorts work well. 30% or so was short on SODA at 50.00 and it plummeted post earnings, now it plummeted again. Now would be the time to cover and switch betting that PEP will join hands with SODA soon. Even if not, SODA has a world wide footprint already and is banking quite a lot.

     

    I think you are simply angered by a bad play.
    5 Feb 2014, 05:48 PM Reply Like
  • Mark Krieger
    , contributor
    Comments (4578) | Send Message
     
    just a few pennies away from $130-interesting that there are no shares available to short from Ameritrade
    5 Feb 2014, 06:11 PM Reply Like
  • gordon gecko13
    , contributor
    Comments (8) | Send Message
     
    or with schwab. waiting to see where the option chain settles tomorrow.....I believe at a minimum 100 should hold? I would like to start a short position around 130 or 140.
    5 Feb 2014, 07:56 PM Reply Like
  • supersaverguy
    , contributor
    Comments (86) | Send Message
     
    Someone educate me how a company is worth 40% more after junk earnings, and forming a partnership that has yet to roll out a product?
    5 Feb 2014, 06:39 PM Reply Like
  • Dodilligence
    , contributor
    Comments (10) | Send Message
     
    The potential for home soda is greater than coffee. Coke is the Starbucks of soft drinks. The company is already a monster and just signaled to the market that it will easily double it's potential.

     

    Well timed to signal that with junk earnings.
    5 Feb 2014, 10:31 PM Reply Like
  • Mark Krieger
    , contributor
    Comments (4578) | Send Message
     
    tried to short at $129.50 in extended hours but Ameritrade had no shares available to loan--what a bummer..I missed a $15 capture
    5 Feb 2014, 06:50 PM Reply Like
  • gordon gecko13
    , contributor
    Comments (8) | Send Message
     
    I tried shorting twtr at 60 also no shares available. The odds are stacked I guess....
    5 Feb 2014, 07:56 PM Reply Like
  • dieuwer
    , contributor
    Comments (2619) | Send Message
     
    What happened to Einhorn's "GMCR is crap" thesis?
    5 Feb 2014, 07:12 PM Reply Like
  • fuzzymc
    , contributor
    Comments (176) | Send Message
     
    He must have gotten that from Herb Greenberg!!
    5 Feb 2014, 07:23 PM Reply Like
  • june1234
    , contributor
    Comments (3257) | Send Message
     
    Once accused of shady accounting /fudging numbers,missed expectations lower guidance to a deal with Coke.Timing is everything.
    6 Feb 2014, 02:48 AM Reply Like
  • aguyinthemidwest
    , contributor
    Comments (116) | Send Message
     
    actually as to the options comment I was playing GMCR with a married put, the only way to fly with the high beta's....got lucky here as obviously their fq2 projections and so forth were weak.
    Now its time to either sell it or sell the calls
    6 Feb 2014, 07:03 AM Reply Like
  • jstratt
    , contributor
    Comments (3019) | Send Message
     
    KO is validating the GMCR home delivery model for the long term.

     

    Logically I dont see this model going beyond the Coffee and Tea drink segment. GMTN can benefit from KO marketing savvy.

     

    I just dont see Sodastream as a long term player (a la apple tablet vs other tablets). PEP should ignor this alternative.

     

    KO is buying insurance for its business as much as trying to grow Coke into drink pods. It will deliver what customers want but doesnt want to share its profits with GMCR.
    6 Feb 2014, 11:12 AM Reply Like
  • Eric Landis
    , contributor
    Comments (1663) | Send Message
     
    I think one aspect of this agreement being overlooked is the distribution potential that KO brings to the table for GMCR, especially internationally. Most of GMCR sales are currently in the U.S. and this partnership should also help GMCR break into new markets using KO's distribution channels.
    6 Feb 2014, 11:20 AM Reply Like
  • beatlebob63
    , contributor
    Comments (3) | Send Message
     
    I've been tracking this stock for a year and no one mentions this?...not once?...I could've made a killing...my own fault but I didn't see anything about Coke being in the picture..

     

    bugger!
    6 Feb 2014, 02:16 PM Reply Like
  • Jack Hutchison
    , contributor
    Comments (431) | Send Message
     
    No one mentioned it because it was inside information, like a trade secret.
    6 Feb 2014, 02:30 PM Reply Like
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